Question 1

Nominal GDP uses constant base­year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Accepted Answer

A) True 
 B)False

Question 2

The GDP deflator is the ratio of

Accepted Answer

A)   real GDP to nominal GDP multiplied by 100.
B)   real GDP to the inflation rate multiplied by 100.
C)   nominal GDP to real GDP multiplied by 100.
D)   nominal GDP to the inflation rate multiplied by 100.E) None of the above
F) B) and D)

Question 3

U.S. GNP

Accepted Answer

A)   includes production of foreigners working in the U.S. and production of U.S. citizens working in foreign countries.
B)   includes production of foreigners working in the U.S. but excludes production of U.S. citizens working in foreign countries.
C)   excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries.
D)   excludes production of foreigners working in the U.S. and production by U.S. citizens working in foreign countries.E) None of the above
F) B) and D)

Question 4

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Accepted Answer

Since this is in real terms, it tells us...

Question 5

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Accepted Answer

The answer of A farmer sells sugar to a candy...

Question 6

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Accepted Answer

A) True 
 B)False

Question 7

Table 23-1
The table below contains data for Chereaux for the year 2015.
 
-Refer to Table 23-1. Net national product for Chereaux in 2015 is

Accepted Answer

A)   $194.
B)   $196.
C)   $198.
D)   $204.E) C) and D)
F) None of the above

Question 8

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Question 9

When an Egyptian firm purchases a cement mixer from Slovakia,

Accepted Answer

A)   Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP decreases, Slovakian net exports increase, and Slovakian GDP increases.
B)   Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is unaffected, Slovakian net exports increase, and Slovakian GDP increases.
C)   Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is unaffected, Slovakian net exports decrease, and Slovakian GDP decreases.
D)   Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP increases, Slovakian net exports do not change, and Slovakian GDP is unaffected.E) A) and B)
F) A) and C)

Question 10

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Question 11

Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .
 
-Refer to Table 23-10. What was this country's real GDP in 2016?

Accepted Answer

A)   $10,575
B)   $11,250
C)   $10,950
D)   $12,550E) All of the above
F) A) and C)

Question 12

Table 23-9
A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.

-Refer to Table 23-9. In 2009, this country's

Accepted Answer

A)   real GDP was $250, and the GDP deflator was 125.
B)   real GDP was $250, and the GDP deflator was 120.
C)   real GDP was $240, and the GDP deflator was 125.
D)   real GDP was $240, and the GDP deflator was 120.E) A) and B)
F) B) and C)

Question 13

Table 23-1
The table below contains data for Chereaux for the year 2015.
 
-Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

Accepted Answer

A)   $190.
B)   $211.
C)   $130.
D)   $141.E) All of the above
F) C) and D)

Question 14

If an economy's GDP falls, then it must be the case that the economy's

Accepted Answer

A)   income falls and saving rises.
B)   income and saving both fall.
C)   income falls and expenditure rises.
D)   income and expenditure both fall.E) C) and D)
F) B) and D)

Question 15

Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased. Investment for the quarter will include

Accepted Answer

A)   both the increased inventory of sugar and the increased inventory of energy drinks.
B)   the increased inventory of sugar, but not the increased inventory of energy drinks.
C)   the increased inventory of energy drinks, but not the increased inventory of sugar.
D)   neither the increased inventory of sugar nor the increased inventory of energy drinks.E) A) and B)
F) None of the above

Question 16

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is included in GDP?

Accepted Answer

A)   the market value of rental housing services, but not the market value of owner-occupied housing services.
B)   the market value of owner-occupied housing services, but not the market value of rental housing services
C)   both the market value of rental housing services and the market value of owner-occupied housing services
D)   neither the market value of owner-occupied housing services nor the market value of rental housing services.E) All of the above
F) A) and B)

Question 18

Which of the following is an example of depreciation?

Accepted Answer

A)   falling stock prices
B)   the retirement of several employees
C)   computers becoming obsolete
D)   All of the above are examples of depreciation.E) All of the above
F) A) and D)

Question 19

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A)   the price of the house, the cost of remodeling materials, the increase in rental value
B)   the price of the house and the cost of remodeling materials, but not the increase in rental value
C)   the costs of the remodeling materials and the increase in rent, but not the price of the house
D)   None of the above are correct.E) A) and B)
F) None of the above

Question 20

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)   GDP incorporates a large number of non-market goods and services that are of little value to society.
B)   GDP places too much emphasis on the value of leisure.
C)   GDP fails to account for the quality of the environment.
D)   All of the above are correct.E) A) and D)
F) None of the above

Exam 15: Measuring a Nations Income

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Correct AnswerverifiedShow Answer

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Net national product for Chereaux in 2015 is

Correct AnswerverifiedShow Answer

GDP is not a perfect measure of well-being; for example,

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Which of the following is an example of depreciation?

Correct AnswerverifiedShow Answer

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . -Refer to Table 23-10. What was this country's real GDP in 2016?

Correct AnswerverifiedShow Answer

U.S. GNP

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U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Correct AnswerverifiedSince this is in real terms, it tells us...View AnswerShow Answer

When an Egyptian firm purchases a cement mixer from Slovakia,

Correct AnswerverifiedShow Answer

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

Correct AnswerverifiedShow Answer

Periods during which real GDP rises are called recessions.

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Table 23-9 A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. -Refer to Table 23-9. In 2009, this country's

Correct AnswerverifiedShow Answer

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Correct AnswerverifiedShow Answer

Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased. Investment for the quarter will include

Correct AnswerverifiedShow Answer

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Correct AnswerverifiedShow Answer

If an economy's GDP falls, then it must be the case that the economy's

Correct AnswerverifiedShow Answer

The GDP deflator is the ratio of

Correct AnswerverifiedShow Answer

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Correct AnswerverifiedShow Answer

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Correct AnswerverifiedShow Answer

Nominal GDP uses constant base­year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Correct AnswerverifiedShow Answer

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Since this is in real terms, it tells us...
View Answer

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Nominal GDP uses constant baseyear prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Correct Answer
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